IN AN extraordinary effort to maintain its status as an honest debtor, North Korea is to repay loans worth billions of pounds to Russia by sending thousands of workers to toil in closed logging camps in eastern Siberia.

The spectre of the gulag came to haunt President Kim's Moscow summit with a report that, in order to service a $5.5 billion (£3.5 billion) Soviet-era debt, he will enlarge a scheme blamed for the torture and summary execution of some of his country's most desperate refugees.

Pyongyang's barter of labour for loans dates from the 1960s and has produced an archipelago of labour camps in some of Russia's most remote forests, where human rights activists claim that inmates are tortured for petty crimes, pursued if they try to escape and are sometimes shot if captured and returned to North Korea. About 90 per cent of the dictatorship's debt to Moscow was serviced with "free" labour last year, a Russian Economics Ministry spokesman told the RIA Novosti news agency, adding that Mr Kim intended to repay his outstanding Russian debts in the same way over the next 30 years. The first detailed claims of abuse in one of the least studied corners of the Russian labour camp system did not emerge until nearly a decade after the start of perestroika. A report by Amnesty International in 1994 alleged that North Korean secret police still operated freely in a string of camps in the Badzharsky Mountains northwest of Khabarovsk, where inmates signed three-year contracts to cut timber, the profits from which were split between the Russian and North Korean Governments.

At their peak the camps held 30,000 workers, who had been drawn by the promise of better wages than they could earn at home and, in many cases, the secret hope of escape to South Korea, whose constitution guarantees asylum to refugees from the North.

The Korean lumberjacks are still instantly recognisable, Russians in the area say, by their skinny physiques and uniforms of striped shirts and blue trousers.

Those considered likely to try to escape were told that their relatives would be at risk should they try to break out and were often given steel shackles or had their legs encased in full-length plastercasts, the Amnesty report alleged. It also described the 1988 suicide of a worker who threw himself in front of a Russian train rather than return to North Korea; an attempted suicide by a worker, who cut open his stomach when arrested for escaping; and the summary execution of a refugee, who was shot at the border when returned there by Russian authorities. Two others were spared the same fate by officials who saw the execution and let them stay in Vladivostok. Another refugee who had escaped several times said that a needle had been driven through his nose and attached to a rope.

Despite such reports, the loans-for-labour scheme was formally renewed in 1995. Administered by the North Korean Number One Log Company, it still "employed" some 4,000 loggers last year, although they are thought to receive subsistence wages, at best. Some have reported being "re-educated" on their return home by being forced to watch the government propaganda films they had missed.

Their labour represented $50 million in debt-service payments to Moscow last year, RIA Novosti reported. The signs are that it will continue to be a vital part of Mr Kim's foreign policy. He urgently needs Russian help to modernise North Korea's power grid and its moribund farms, not to mention its Armed Forces.

President Putin has made clear he is ready to oblige, but also that all assistance must be paid for.